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The Housing Crisis is Breaching Human Rights

Published On: April 30, 2015 at 11:56 am

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Categories: Landlord News

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A report by charities has found that the housing crisis in the UK is in breach of United Nations (UN) human rights standards.

The UN human rights commitment to provide people with adequate housing has been violated because the housing crisis is so serious. The housing charities highlight spiralling rental costs, harmful conditions in properties and increasing levels of homelessness.

The report also warns of “profound issues of lack of supply, increasing housing costs, lack of security of tenure and homes of such poor quality that they are unfit for habitation.”

The group, called Just Fair, is made up of Crisis, Oxfam, Amnesty International, Save the Children and UNICEF UK.

The report’s author, Dr. Jessie Hohmann, a law lecturer at Queen Mary University of London, says: “It is quite clear we are in breach of our UN obligations. It is possible to take policy steps to protect the most vulnerable and marginalised, but the UK government has decided not to do that. Since the 1980s, we have lost any concept of housing’s social function, and that is why protest movements are gaining ground.

“Without decent housing, you can’t experience an adequate life in society, but now housing is seen just as an asset.”1

In the 40-page document, Just Fair revealed:

  • Private rent costs are double those of council properties, at £163 per week. A quarter of renters depend on housing benefit to pay.
  • A third of properties in the private rental sector do not meet basic health, safety and habitability standards.
  • The amount of people sleeping rough in London rose by over a third between autumn 2013 and autumn 2014, and funding for shelters dropped.
  • Last December, there were around 62,000 families in England living in temporary accommodation. This is the highest number for five years, with a further 280,000 households at risk of homelessness.
  • The amount of families living in bed and breakfasts has more than tripled from 630 in 2010 to 2,040 in 2014.
  • “Exceptionally high” levels of homelessness and the rising number of families at risk of homelessness represents “a serious failing in the government’s obligations.”
The Housing Crisis is Breaching Human Rights

The Housing Crisis is Breaching Human Rights

The organisation says that the UN requirements to “recognise the right of everyone to an adequate standard of living”, including housing, can only be breached in instances of “force majeure”, such as natural disaster or war. Cuts made when the country is in financial crisis should be ended when the crisis finishes.

The shocking report arrives as politicians deliver their housing policies in the general election campaign. Chief Executive of Crisis, Jon Sparkes, says that the report “should be a wake-up call for all political leaders.”

Recently, Labour announced their rent controls proposal. Find out more: /milliband-gives-his-answer-to-housing-problem/. The Conservatives have vowed to extend the right to buy scheme to housing association tenants. Read more: /how-would-the-conservatives-right-to-buy-work/.

Housing protests have also emphasised the public’s frustration over the state of the property market. Read about the Reclaim Brixton demonstration: /the-purpose-of-brixtons-anti-gentrification-protest/.

The Just Fair report is critical of the coalition’s housing policies: “Problems in realising the right to housing are linked to a political climate of austerity, and attendant cuts to state social security and other benefits. The resulting situation is accurately identified as one of crisis.”

It also cites one of the most serious problems as the failure to build enough homes, which goes back to Labour and Conservative governments.

Some of the things worsening the crisis are the removal of bedroom tax, the “stark undersupply” of new homes and insecurity of tenure in the private rental sector, says the report.

Additionally, it states: “It should be a matter of significant concern that one third of households in the private rental sector are living in housing that is substandard to the point that it is unsafe or unhealthy.”

The report revealed that “revenge evictions”1, when tenants are evicted when asking for improvements, are too common, with around 200,000 in 2013. That is a breach of the UN’s prohibition of arbitrary eviction, claims the report.

Brandon Lewis, Conservative housing minister, responds to the findings: “We inherited a broken housing market after Labour’s housing crash.” He adds, “there is more to do”, but the Conservatives will provide 275,000 new affordable homes in the next parliament. 

Lewis continues: “Despite the need to pay off Labour’s deficit, Conservatives in government have worked hard to increase house building to its highest since 2007 and delivered 217,000 new affordable homes. We will ensure economic growth and stability to allow continued investment in frontline services for homeless and the vulnerable.”1

Labour’s Emma Reynolds says: “Under David Cameron, house building is at its lowest levels in peacetime since the 1920s, there is a severe lack of affordable homes, families face growing insecurity in the private rented sector, and there has been a dramatic rise in homelessness and rough sleeping. Labour will take action to tackle this crisis.

“We will get 200,000 homes built a year by 2020, boost the number of affordable homes built year on year, reform the private rented sector and we will set out a long-term strategy to tackle homelessness and rough sleeping.”1

Crisis’ Jon Sparkes explains: “Rough sleeping has risen by 55% in the past five years. This dreadful state of affairs is the result of successive governments’ failure to tackle the housing crisis, combined with severe cuts to housing benefit that have left growing numbers of people struggling to keep a roof over their heads.

“The housing crisis will not solve itself. We desperately need more affordable homes as well as political action to fix our broken private rented sector.”1

The report will inform a UN review of housing in England this autumn. The Joseph Rowntree Charitable Trust largely funded it.

1 http://www.theguardian.com/society/2015/apr/28/uk-housing-crisis-in-breach-of-human-rights

Zoopla purchases uSwitch for £160m

Published On: April 30, 2015 at 11:48 am

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Categories: Finance News

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Online property organisation Zoopla has this morning announced a £160m takeover of price comparison site uSwitch. The move will see Zoopla able to expand into sales of additional home products, such as energy.

Announcing the news, Zoopla Property Group said that uSwitch would carry on as a standalone brand, with its entire management team remaining under the stewardship of chief executive Steve Weller. The firm believes that the acquisition will be completed by the end of June.

Zoopla Property Group said in a statement that, ‘combining two of the UK’s most successful digital businesses would create a single resource where consumers can research, find and manage their home.’[1]

It is hoped that the overall value of the deal could increase to as much as £190m with the insertion of a performance-based clause.

Innovation

uSwitch works to get consumers the best deal from suppliers, which include communication and energy firms. The organisation made an annual profit of £16.2m last year.

Zoopla purchases uSwitch for £160m

Zoopla purchases uSwitch for £160m

Alex Chesterman, founder of Zoopla, said that his company had, ‘always been at the forefront of innovation in our industry and this deal brings together two of the UK’s best known and fastest growing digital brands.’ He revealed that this is just the, ‘next step towards creating the ultimate platform where consumers can research, find and manage their home.’[2]

Mr Weller also welcomed the deal, stating, ‘I am immensely proud of everything that we have achieved over the last 15 years and look forward to the next phase of our journey.’ He added that, ‘consumers need our support now more than ever before and, with Zoopla Property Group’s impressive credentials, I am confident that we will be able to help even more people save money on their household bills.’[3]

[1-3] http://news.sky.com/story/1474989/zoopla-agrees-160m-deal-to-buy-uswitch

 

 

Landlords Predict Rent Growth will Slow by 2016

Landlords are expecting annual rent growth to slow to 1.7% by 2016, down from the current rate of 3.7%, found a recent sentiment study.

However, a quarter of investors want to buy more properties this year and 60% believe now to be a good time to invest in the buy-to-let market, the research from Your Move and Reeds Rains found.1 

The survey indicates that after the latest surge in rent growth, landlords predict rent rises will slow in the next year to a steadier rate.

The latest buy-to-let index from Your Move and Reeds Rains found that average residential rents in the UK rose by 3.7% in the year to March 2015, making it the fastest pace for two years.1 But this is likely to change.

The amount of landlords who will not increase their rents in the next 12 months has risen from 56% in September 2014 to 60% at present. Just 40% plan to set their rent prices higher before March 2016.

The study also revealed that in the past six months, 45% of landlords have seen a growth in tenant demand, from 41% in September 2014. There has been an upsurge in lettings activity recently, as new tenancy agreements in England and Wales rose 6.9% in the month to March 2015.

As a consequence, the number of landlords predicting a further rise in tenant demand is now 63%, up from 56% in January 2014. Just 3% of landlords current expect private rental demand to drop in the next two years.

Landlords Predict Rent Growth will Slow by 2016

Landlords Predict Rent Growth will Slow by 2016

The high demand for rental accommodation is pushing landlords to invest further into the market. 60% think now is a good time to invest in buy-to-let, up from 54% in September 2014.

The main cause for this confidence boost is that buy-to-let provides better capital returns than other types of investment, noted by the 54% of landlords who believe it to be the perfect time to buy a rental home. 40% of investors think now is a good time because of market conditions, which mean property prices are lower and growth has steadied.

18% of landlords have increased their property portfolios in the past year, and another quarter plan to buy another in the next 12 months, a rise from 22% in September 2014.

Director of Your Move and Reeds Rains, Adrian Gill says that demand for rental property is not going to decline: “First time buyers have been thrown a lot of floating aids in the past year, most recently the reform of Stamp Duty and Help to Buy Isa, but the private rented sector is still vital in plugging a hole until more households can get their finances above water.”

He says that saving a deposit is like swimming against the tide and savings rates are sinking. Furthermore, others depend on the flexibility of the rental sector for their careers.

“This supply-demand imbalance has previously caused a strong tide of rent rises, but this looks set to ebb away to calmer levels with a fresh fleet of rental properties on the horizon,” he says.

Gill explains that competition for homes to rent is providing strong returns and protecting landlords from the insecurity of void periods, which offers peace of mind concerning income.

He says: “And with house price growth consistently cruising forward and propelling longer term capital gains, awareness of buy-to-let as an alternative investment to other mainstream assets has soared. The current divergence between yields and interest rates places buy-to-let head and shoulders above the low returns on other asset classes.

“Existing landlords have certainly caught the buy-to-let bug, and with extensive reforms to pension annuities now in place, investment is cropping up from new players too.”

Overall, 22% of investors have seen their buy-to-let mortgage payments becoming cheaper in the last year, up from 14% in September 2014. In the same timeframe, the amount of landlords who found their buy-to-let mortgage payments becoming more expensive has around halved, from 39% to only 21%.

Of the landlords trying to raise mortgage funds in the past year, 14% think it is now easier to secure finance than a year ago. This rose from 8% in September 2014. As record low interest rates keep mortgage rates down, 21% of landlords put the availability of cheap finance high on the list of incentives to buy rental properties. This increased from just 11% in the third quarter (Q3) of 2014.

Yields on buy-to-let properties are a key driver for initial investment, but for most landlords (62%), the most important factor in renting out a home is to have trustworthy tenants. The second motive is to have tenants that pay their rent on time, say 25% of landlords.

Gaining the highest possible rental returns was ranked bottom of investors’ priorities, being the most important for only 4% of respondents.

For those planning to increase rents in the next 12 months, 43% say their main motivation is to cover the cost of inflation. The second most important reason is to pay for maintenance work, revealed 35%.

Approaching the general election, 41% of landlords do not support plans for banning fees charged to tenants, with just 32% backing the proposals. For those not supporting the abolishment of fees, 61% are concerned that renters with unstable finances will be able to rent homes they cannot afford.

Additionally, 25% of landlords fear that tenants would move house more often, as they won’t have to pay one-off tenancy fees. Landlords would therefore have less stability and potentially more void periods.

36% of investors prefer the maximum length of a tenancy to be one year.

1 http://www.propertywire.com/news/europe/uk-rent-rises-landlords-2015042810442.html

 

Pension reforms lead to more BTL mortgages

Published On: April 30, 2015 at 10:37 am

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Categories: Landlord News

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Changes in pension regulations have led to an influx of lower rate buy-to-let mortgages becoming available on the market.

Figures from Moneyfacts, a financial product analyst firm, indicate that investors can now choose from 226 different fixed-rate mortgage deals, as opposed to 162 just six months ago. Additional statistics from the same report show that the average two-year fixed-rate deal has dropped to 3.45% from 3.7% over the same period.

Pension reforms

The new pension regulations, which came into effect on April 6th, saw those over the age of 55 able to access their savings as a taxable, lump sum. Many are using this to subsequently invest in the property market.

As such, lenders are subject to fewer restrictions on their buy-to-let mortgages, with the transaction now being treated as business lending. This is in contrast to residential lending, regulated by the Financial Conduct Authority.

Charlotte Nelson of Moneyfacts.co.uk, believes that buy-to-let mortgages are, ‘experiencing a renaissance, becoming not only more widely available but cheaper too.’ She continued, saying, ‘with more five-year fixed rate deals charging below 5% than ever before, it is little wonder that the newly emancipated pensioners are genuinely considering buy-to-let as a retirement option.’[1]

Pension reforms lead to more BTL mortgages

Pension reforms lead to more BTL mortgages

Seek assistance

Nelson warns however that investors looking at purchasing a property as an alternative to a pension must, ‘seek the guidance of a financial advisor who can access a larger portion of the market.’ She continued by saying, ‘with easy savings to be made,’ with the right advice, people are more likely to be, ‘recouping more in rent, which will allow you to get a bigger return on an investment.’[2]

A word of warning has been issued by HMRC experts, who claim that pension-savers that do not ensure that they have tax-efficient methods of withdrawals could face large bills.

[1-2] http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11552236/Pension-freedoms-spark-flood-of-cheap-buy-to-let-mortgages.html

 

 

The Purpose of Brixton’s Anti-Gentrification Protest

The Reclaim Brixton protest expressed worries that the area’s culture is being twisted and replaced.

Saturday saw campaigners in South London announce their solutions to gentrification in Brixton. The majority of these options were based around housing and Lambeth Council’s policies. The demonstrators demanded: “Build more houses for working people”, “rent caps”, “Lambeth to stop evictions” and Lambeth to “prioritise repair of estates over regeneration”.

Some focused on small businesses, and called for the Council to protect those that represent “the community”. Some simply declared throughout the day: “Lambeth is not for sale”.

These statements may express issues in this specific area, but reflect the fears of gentrification in many parts of the capital. Many are concerned about the rising cost of property and land, and the social changes this is causing.

Traditionally, Brixton was a cheap place to live. However, spiralling property prices and rents are making it too expensive for those on low incomes, but whose salaries are too high to entitle them to social housing. As a consequence, wealthier Londoners are moving into the area and those who were born and brought up there can no long afford to stay.

Another area of concern is the retail spaces beneath Brixton’s railway bridge. Network Rail, who owns these spots, is working with the Council to renovate them. Some residents believe this could wipe out local traders.

Carolyne Hill, born in Brixton, would not be opposed to the refurbishment of the area, but does not believe Network Rail will work with small businesses to allow them to return.

“You have family businesses that have been there for three generations,” she says. “They [Network Rail] want to whitewash it. They want to bring in, you know, Pret, Subway. It’s the cookie-cutter mould of gentrification.”1 

The protestors at the demonstration highlighted the cultural and ethnic mix in Brixton. There were many Afro-Caribbean campaigners, including the Brixton Black Revolutionaries group, who fought during the Brixton Riots of 1981 and 1985.

The music was Latin American and the food from all over the world. The general theme of the demonstration was the worry that the boring, corporate sort would replace Brixton’s varied culture.

During the day, some protestors aimed to occupy the Town Hall and smashed the window of Foxtons estate agents, a sign of yuppie culture. But it seems likely that Foxtons will stay and the people they sell to will still come.

The idea of gentrification is not new, even in Brixton. It has certainly been quicker recently, but has been around for years.

Sociologist Ruth Glass created the term in 1964, when reacting to what was happening in her home of Islington.

Fifty years ago, a middle-income family could buy an attractive Victorian three-bedroom home in Highbury. Twenty-five years ago they wouldn’t be able to, but they could buy in Hackney.

Now, the children of the couple that bought in Hackney are struggling to get onto the property ladder. They’re moving further out and changing the face of the places they arrive in. These parts become more middle class and therefore expensive. Suddenly, those priced out by gentrification are creating the problem for other people.

Two years ago, Brixton writer Alex Wheatle described some of the problems with controlling gentrification in a short film for The Guardian. He had previously been imprisoned for his role in the 1981 riots, but was then awarded an MBE in 2008 for his services to literature.

He remembered the days when Brixton Market was filled with the sound of reggae and the smell of Caribbean food. But also, he does not mind the changing scene: “I must admit it’s nice to see a variety of people enjoying Brixton in a way I never thought imaginable when I was 17. Brixton was a feared place to be.”1

One of the main concerns surrounding gentrification is that the ethnic society will be diluted. However, diversity is stronger than ever. In Lambeth as a whole, containing Stockwell, Clapham and part of Vauxhall, there has been a wide range of races and cultures entering the area, highlighted in the last Census.

So what can Lambeth Council do? Well there is only so much that a local authority can do to change house prices and private rents. They could make schools, parks and streets less appealing to those wanting to live there, but this will also affect local residents.

Bill Parry from an organiser of the protest, Unite, says that Lambeth faces big cuts: “This is about big politics and I don’t think an individual council can solve it. But they must put themselves on the side of the people who elected them.”1

Parry believes that people need to push campaigns against rogue landlords and would like to see Labour building more council homes nationally.

Matthew Bennett, Lambeth’s cabinet member for housing, emphasises a project for building 1,000 new council houses in the next four years, aimed at helping residents on low incomes who cannot buy or rent privately.

But this programme is faced with opposition from those whose estates would have to be rebuilt in order to create extra housing. They believe that, like gentrification, communities will be broken up.

Lambeth is also evicting those in long-term, short-life council homes, bringing allegations of social cleansing. Bennett argues that the sale of these properties has raised £60m so far, which will fund the 1,000 new council houses. But whose argument is stronger?

Bennett also stresses that those likely to be priced out of Brixton are not the very poorest residents. Despite the pressures on social housing, the 20,000 people in council homes are secure and will not be leaving unless they choose to.

And sometimes, people do want to leave Brixton. For those who bought properties when they were cheap, they can now sell at huge profits and relocate to the outskirts. Who they sell to is not their problem.

1 http://www.theguardian.com/cities/davehillblog/2015/apr/28/brixton-anti-gentrification-protest-reclaim-foxtons-estate-agent

House Prices increased again in April

Published On: April 29, 2015 at 4:36 pm

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Categories: Landlord News

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The latest Nationwide House Price Index has showed that UK house prices rose yet again in April.

An increase of 1% was recorded, which was significant due to it being the largest monthly rise since June 2014.[1]

Growth

Statistics from the report showed that annual price growth was up marginally from 5.1% in March to 5.2% in April. Average house prices are now £193,048. Robert Gardner, Chief Economist at Nationwide, commented that, ‘the pick-up in price growth has occurred even though the pace of activity in the housing market has remained fairly subdued in recent months.’ Gardner also noted that, ‘the number of mortgage approvals is still well below its long run average and 20% below the levels recorded in early 2014.’[2]

Mr Gardner then went on to describe the strength of the economy but seemingly slow pace of housing market activity as, ‘something of an anomaly.’ As a possible reason, Gardner suggests that, ‘it is possible heightened uncertainty ahead of the election is weighing on activity.’[3]

However, he concedes that, ‘there is no compelling evidence from previous UK elections to suggest a strong impact.’ Gardner believes that,’ healthy labour market conditions and continued low mortgage rates should help underpin housing demand in the quarters ahead.’[4]

‘Law unto itself’

Chief Executive of Dragonfly Property Finance, Jonathan Samuels, stated that the recorded 1% increase in April, ‘underlines the inherent volatility of the property market. It is truly a law unto itself.’[5]

Samuels believes that, ‘while mortgages are cheap, employment high and the cost of living low, people are far more cautious than they were in the past.’ He thinks that, ‘there is an element of caution and conservatism, in the market that perhaps wasn’t there before 2008.’[6]

House Prices increased again in April

House Prices increased again in April

‘People are more aware than ever that the property market is a double-edged sword,’ explains Samuels, who went on to sat that, ‘buying a property is not a decision that can be taken lightly.’ Samuels does expect activity levels to rise further after the General Election, but feels that, ‘2015 as a whole is shaping up to be a middling year for the market.’[7]

Imbalance

‘Although house price rises in recent months may seem subdued when compared to last year, prices are still rising well above the level of inflation,’ remarked Jeremy Duncombe, Director of Legal and General Mortgage Club. He believes that this is due to a, ‘surplus in demand which is outpacing the supply of new houses,’ and it is this imbalance that has,’ pushed up the average asking price in April, making homeownership a more distant dream for many potential buyers.’[8]

Duncombe does however believe that it is, ‘encouraging to see that political parties are talking about building more properties in the run up to the election.’ He went on to say that, ‘we need to ensure that house building remains at the top of the agenda throughout the next parliamentary term so a good supply of new properties is built and the issue is not forgotten about after the electioneering is over.’[9]

 

[1-9] http://www.financialreporter.co.uk/finance-news/april-sees-pick-up-in-house-price-growth.html?utm_content=bufferac29b&utm_medium=social&utm_source=twitter.com&utm_campaign=buffer